The Bank of Albania holds 6.7 billion euros in foreign exchange reserves

2025-08-07 07:24:00, Ekonomi CNA

Foreign exchange reserves continued to grow in the first half of this year. According to data from the Bank of Albania, at the end of June, the value of reserve assets reached 6 billion 727 million euros, an increase of 7.4% compared to the end of 2024 and 22% compared to the same period a year earlier.

To a large extent, the increase in foreign exchange reserves was influenced by the issuance of the Albanian Government's next Eurobond in February, for a total value of 650 million euros.

However, the increase in the reserve continued in the second quarter of the year. Among other things, the purchases of foreign exchange by the Bank of Albania in the domestic foreign exchange market are also estimated to have had a significant impact.

Seeing the continuation of strong upward pressures on the local currency, the Central Bank has continued to purchase foreign currency this year, in order to prevent further decline in the Euro-Lek exchange rate.

In parallel, the Bank of Albania has also continued its planned auction program, precisely with the aim of increasing its foreign exchange reserves. In the three auctions held during the first quarter of 2025, 33.2 million euros were purchased, with an average of 11.07 million euros, compared to an average of 14.2 million euros during 2024.

The amount purchased was similar to the amount purchased in the same period a year ago (32.6 million euros), indicating, according to the Bank of Albania, that the relatively lower participation of banks is related to seasonal factors.

Although data is not yet available, it is believed that the amounts purchased in the domestic foreign exchange market increased significantly during the second quarter of the year.

The Bank of Albania aims to purchase 270-350 million euros through auctions this year, or 20 million euros more than the 2024 target, both in the lower and upper ranges. Last year, the Bank of Albania purchased approximately 933 million euros in the domestic foreign exchange market. Foreign exchange purchases reached a historical high and increased by 249% compared to the previous year.

At mid-year, debt securities accounted for 73% of the reserve assets, while cash deposits accounted for 18%. The remainder of the reserve is invested in gold and special drawing rights (SDRs) with the International Monetary Fund.

Foreign exchange reserves are an important instrument to cushion potential shocks, related both to the current account deficit and the high level of Euroization of the financial sector in the country./ Monitor.al